Where a motion to set aside defaults has been filed, that motion should be allowed because the defendants did not “completely fail to respond” to the complaint and have asserted a meritorious defense.
“This matter is before the Court on Defendants Sugar Leaf Properties I, LLC and Stevens Audish’s Motion to Set Aside Defaults entered on January 23, 2024. The Court has reviewed the pleadings, motion, and response, and has heard oral argument on the motion.
“Defendant Stevens Audish (‘Audish’) is the sole Member and Manager of Sugar Leaf Properties I, LLC (‘Sugar Leaf’). Sugar Leaf operates a licensed marijuana facility in Marcellus Michigan. Plaintiffs allegedly invested $7,000,000 in Sugar Leaf upon execution of a Subscription Agreement in 2021.
“The decision to grant or deny a motion to set aside a default is within this Court’s discretion. Shawl v Spence Bros, Inc , 280 Mich App 213, 220; 760 NW2d 674 (2008).
“The Court is satisfied that consideration of relevant factors indicate that Defendants have demonstrated ‘good cause.’ On January 17, 2024 Defendant Audish, in propria persona, filed a Motion to Compel Arbitration on his own behalf and on behalf of Sugar Leaf, in which he sought an order staying proceedings and compelling the parties to arbitration. Defendants assert and, Plaintiff does not dispute, that the Motion to Compel Arbitration was filed within the time to ‘file an answer or take other action permitted by law or [the Michigan Court Rules]’ as provided by the Court Rules. ... Thus, Defendants did not ‘completely fail to respond’ to the Complaint. Additionally, the circumstances behind any fail to file or timely file appear to relate to the fact that Defendant Audish was acting in propria persona. Furthermore, Plaintiffs sought defaults immediately after the deadline for a response was required. Lastly, contrary to Plaintiff’s argument, there was not an unreasonable amount of time, given that Defendants were not represented by counsel, between the time the default was entered, January 22, 2024, and the time the motion to set aside was filed on March 12, 2024.
“To demonstrate a meritorious defense, the moving party must file an affidavit setting forth sufficient facts to support a defense that, if proven, would afford the moving party a defense against the plaintiff's claim.
“In this case, Defendants rely on an affidavit asserting that the Sugar Leaf Operating Agreement, Section 12.5 provides for private arbitration and the terms and conditions of the Operating Agreement were incorporated in Sugar Leaf’s Subscription Agreement. Plaintiffs do not argue that the existence of an arbitration provision cannot be a meritorious defense. As was described above, the Court of Appeals in Shawl stated that an affidavit of meritorious defense should be considered to determine whether ‘a ground for summary disposition exists under MCR 2.116(C)(2), (3), (5), (6), (7), or (8).’ Shawl , 280 Mich App at 238. The existence of an agreement to arbitrate is one of the circumstances upon which summary disposition may be granted under MCR 2.116(C)(7). Thus, it appears that, under Shawl , an agreement to arbitrate may be a meritorious defense.”
Bonner Holdings LLC v. Sugar Leaf Prop. I LLC; MiLW 10-107999, 8 pages; Oakland Circuit Court; Valentine, J.
Click here to read the full text of the opinion
Copyright © 2024 BridgeTower Media. All Rights Reserved.
Most Popular
Comments / 0